Prima Homes Nominees Pty Ltd v Watson - [2002] WADC 139

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: PRIMA HOMES NOMINEES PTY LTD -v- WATSON [2002] WADC 139

CORAM: FRENCH DCJ

HEARD: 5-7 & 28 JUNE 2002

DELIVERED : 12 JULY 2002

FILE NO/S: CIV 1166 of 2001

BETWEEN: PRIMA HOMES NOMINEES PTY LTD (ACN 009 245 854)
Plaintiff
AND
RONALD DOUGLAS WATSON
Defendant

Catchwords:

Contract - Building contract - Claim for balance owing - Defects and omissions - Turns on own facts

Legislation:

Nil

Result:

Judgement for plaintiff in the sum of $48,895

Representation:

Counsel:

Plaintiff: Mr P G McGowan
Defendant: Mr A S Stavrianou

Solicitors:

Plaintiff: Conal O'Toole
Defendant: B W Ashdown

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

FRENCH DCJ:

Background to proceedings

In September 1999 the plaintiff and the defendant entered into a building contract for the construction of a private residence at Lot 74, Foundry Court, North Fremantle at a price of $444,890. During the period of construction the defendant requested a number of variations to some aspects of the building and there are other adjustments that when brought to account increased the cost of the building by a sum in excess of $40,000. The contract provided for a construction time of 260 working days with completion on 15 October 2000. The construction of the residence commenced shortly after the date of the contract although the building was not completed by 15 October 2000.
In December 2000 the plaintiff advised the defendant that the building had reached "a stage of practical completion" and requested payment of the final instalment under the contract of the sum of $56,732 together with an amount of variations estimated at that date at $48,887.72. The plaintiff also advised the defendant that a pre‑handover inspection should be arranged between them so that the house could be handed over to the defendant on 15 December 2000. The defendant had arranged for a building inspection by Mr Barry Knowles at that time and advised the plaintiff that it did not accept that the house was practically complete and ready for handover until the defects listed in Mr Knowles report had been rectified. At about the same time the defendant also engaged Mr Ian Borrell, a quantity surveyor, to advise him in relation to matters of quantum of the variation items.
For the next two months the dispute between the plaintiff and the defendant appeared to have been at a stalemate with the plaintiff refusing to hand over the house until the final account including the amount of variations had been paid and the defendant refusing to pay that sum or to acknowledge that the house had reached a stage of practical completion until the defects listed in the building inspection report had been rectified by the plaintiff. On or about 14 February 2001 the defendant entered into possession and took up residence in the property.
On 8 January 2001 the defendant paid to the plaintiff the sum of $60,000 on account of moneys claimed by the plaintiff. The dispute between the plaintiff and the defendant remains unresolved despite building inspections, reports and attempts to have the matter dealt with by arbitration. In May 2001 the plaintiff commenced these proceedings.

The pleadings

The plaintiff's statement of claim dated 8 May 2001 sets out particulars of the written contract entered into between the plaintiff and defendant. Payment of the contract sum was to be made by progress payments to be paid by the defendant within 10 days of receiving notice from the plaintiff that the building had reached a specified stage of construction. The contract contained a clause to the effect that practical completion of the works which was the building stage at which the final payment for the contract sum was to be paid was "deemed to have occurred when the works were structurally complete and reasonably fit for habitation notwithstanding any unfinished work of a minor nature which does not unduly interfere with a free and uninterrupted use of the premises". The statement of claim alleges that the plaintiff brought the works to a state of practical completion by 14 December 2001 and delivered an account in the sum of $113,744.65 which remains unpaid by the plaintiff with the exception of the sum of $60,000 paid on 8 January 2001. The plaintiff alleges that on or about 14 February and in breach of the contract the defendant entered into the property and took possession of it without the plaintiff's consent. The plaintiff claims the total amount of its account less the sum of $60,000 already paid, together with interest.
In a defence and counterclaim dated 4 July 2001 the defence denies that the works had reached a stage of practical completion and alleges that the works are defective and incomplete. Particulars of defective and incomplete works are set out in a separate schedule pursuant to O 20, r 13(2) of the Supreme Court Rules. The defendant alleges that the plaintiff has repudiated the contract by refused to rectify incomplete and defective works and by failing to bring the building to practical completion on the due date of the 6 October 2000. The defendant denies that it owes any sum to the plaintiff and by counterclaim sets out particulars of loss and damage caused by the plaintiff's breach of the contract including the costs of rectifying defective and incomplete work as set out in the schedule together with costs for additional rental for alternative accommodation since October 2000 and the cost of investigation of the building work.
In par 17 of the defence it is alleged that the plaintiff has compromised its right to interest on the amount claimed because it accepted the sum of $60,000 alleged to represent the undisputed portions of the plaintiff's claim on condition that it waived its right to interest.
The plaintiff's reply and defence to counterclaim denies that it has repudiated the contract or breached the contract by failing to rectify incomplete or defective works.

The issues

1. The primary issue for determination is whether the plaintiff had brought the works to "practical completion" on or about 15 December.
2. If the works have been brought to practical completion either on 15 December 2000 or at some later date, what, if any, is the total balance due to the plaintiff from the defendant. When the hearing began there was still an issue in relation to the correct quantum of the variations account. That resolved to the extent that the only issues in dispute were the assessment of GST due and the plaintiff's right to interest on the claim.
3. The defendant's entitlement to damages for or a set‑off on account of rental payments made as from 6 October to 15 December 2000 or 14 February 2001.
4. What amount, if any, is the defendant entitled to offset against the plaintiff's claim for the cost of remedying defective or incomplete works?
There is a degree of overlap between the issue of whether the building reached a stage of practical completion and the items of defect and incomplete works. Although that contributed to some confusion in the proceedings and in the presentation of evidence discrete findings on the issues have been determined as set out below.

The plaintiff's evidence

On 23 September 1999 the plaintiff and defendant entered into what is described as a lump sum building contract for the construction of a house in Foundry Court, North Fremantle. In a schedule of particulars the contract provides for the works to be completed in 260 working days, that is on 15 October 2000. Clause 7 stipulated that the plaintiff would complete the building within that time. Clause 7(b) provided that the plaintiff would not be responsible for delays caused by matters over which it had no control including, inter alia, any instruction or delay of instruction by or any omission by the defendant, or the unavailability of labour. In the event of delay being caused by matters over which the plaintiff has no control it is entitled to reasonable extensions of time upon notification given to the defendant.
Mr Anthony Secola is one of the directors of the plaintiff and a registered builder. Mr Secola confirmed that the building of the residence commenced in September 1999. At the request of the defendant a schedule (Exhibit 5) of approximate dates of the major trades involved in the building of the residence was supplied to him. Mr Secola stated that the only real difficulty in relation to delays in the building prior to reaching the lock‑up stage was due to the unavailability of a bricklayer to work on the first floor brick work. According to the schedule he was to be on the building site from 20 December 1999 to 28 January 2000. The bricklayer was delayed for a period of some 5‑6 weeks before he was able to start. The plaintiff attempted to obtain another bricklayer but was unable to obtain one of the required quality because of the pre GST building boom. Mr Secola stated that this factor delayed the total construction for a period of approximately six weeks. The roof carpenter was the next major trade to follow the bricklayer. On 26 June the plaintiff sent a letter to the defendant advising that the construction was six weeks behind schedule as a result of the delay caused by the bricklayer. Mr Secola also advised that there were some other problems in relation to selections of finishes and colours by the defendant, so the letter of 26 June contained a caution that they required selections within the next 14 days. On 28 June the plaintiff sent a fax to the defendant in relation to concerns due to a lack of selections for paint and entry glass type and colour. On 2 August 2000 the plaintiff sent a letter to the defendant advising him that delay as at that date was estimated to be a total of 12 weeks. The letter advised that the delay was caused by difficulty in obtaining tradesmen (estimated at six weeks) and further delay as a result of failure by the defendant to advise of selection of finishes promptly. A further letter to that effect was sent to the defendant on 13 September. Mr Secola stated that the delay in selections caused difficulties in scheduling the various trades involved and such delays were critical in the sense that they caused delays to subsequent trades. Mr Secola confirmed that on his estimates the delays in various selections was responsible for approximately six weeks delay in the total construction. Mr Secola referred to additional communication between the plaintiff and the defendant (Exhibits 9‑13) concerning difficulties and delays in advising of various selections.
Mr Secola received a report dated 8 December 2000 following an inspection of the building by Mr Barry Knowles on the defendant's instructions. Mr Secola stated that on his inspection of the building in December 2000 he was of the opinion that it had reached "practical completion stage" and disagreed with the contrary opinion expressed in Mr Knowles report. Although Mr Secola's evidence extended to particulars of all of the items contained in Mr Knowles' report in broad terms his evidence was that the various items referred to in the report were either minor matters to be corrected after the stage of practical completion and subsequent to the defendant taking possession of the premises, or matters that the builder was not required to address in any event as they were the defendant's responsibility. A detailed response to that effect was sent to the defendant on 12 December 2000.
Mr Donald Marquis inspected the property on 28 November 2001 at the request of the plaintiff. Mr Marquis has a tertiary qualification in building, and although not a registered builder, is a member of the Royal Institution of Chartered Surveyors and the Chartered Institute of Building and an Associate of the Australian Institute of Quantity Surveyors. He has been practising as a quantity surveyor and builder and project manager for 35 years. At the time of his inspection of the premises he was accompanied by the parties in these proceedings together with their solicitors and Mr Barry Knowles. He had the inspection report originally prepared by Mr Knowles in December 2000 together with a further defects list prepared in February 2001. His building inspection report contains comments on each of the items listed in those reports. His report consisted of recording or noting Mr Secola's response to each of the itemised alleged defects. In relation to some of the matters Mr Secola had agreed to undertake the work and in relation to other items Mr Marquis noted that the builder did not agree that it was his responsibility or that it required any rectification. Mr Marquis stated in the report and confirmed in court that in his opinion none of the items in the inspection report prepared by Mr Knowles in December 2000, nor the additions in the subsequent defects list of February 2001 would have affected the house having reached a stage of practical completion, namely that the house was substantially complete and fit for use and/or occupation by the owner.

The defendant's evidence

The defendant, Ronald Watson, described the circumstances in which he engaged the plaintiff to build what he termed as his "dream house" on a riverside block with panoramic river views. During the period of construction he visited the building site on a regular basis. He described the initial stages of construction and the delay in January 2000 because of the unavailability of the bricklayer. He confirmed that Mr Tony Secola advised him that a bricklayer was unavailable at that time. However, he agreed that once the bricklayer was on site in February construction proceeded in a reasonable fashion. He confirmed that he received the letter dated 2 August 2000 advising of a possibility of a total delay of 12 weeks due to the difficulty in obtaining tradesmen at the time and through delay in selections on his part. He stated that although he had received no official notice of delays before then it was obvious that the building was slow. The defendant conceded that there was some delay caused by his failure to make selections of finishing items.
By November 2000 the defendant agreed that the building was nearly completed and had reached lock‑up stage. He stated that on 1 December 2000 he received an account from the plaintiff for additional amounts claimed by the plaintiff for variations to original specifications. This was later updated to include additional variations. Upon receipt of that account the defendant employed a quantity surveyor, Mr Ian Borrell to assess the accuracy of the account. He explained that this was not because he was concerned at the quantum of the final balance but that he considered it prudent to have it dealt with by a professional who is familiar with such costings and in any event his time was taken up with running his own business. The defendant emphasised that at all times he has had the financial ability to pay whatever is owing to the plaintiff and his concern was with the validity and accuracy of the amounts claimed from him. On Mr Borrell's advice the defendant engaged Mr Barry Knowles to inspect the building and prepare a report on the state of the construction in terms of quality of the building and compliance with the contract and specifications. A report from Mr Barry Knowles with a list of alleged defects and omissions was prepared and dated 8 December 2000. An annexure to that report dated 14 February listed further items of defective or incomplete works. In addition to the items listed in Mr Knowles' report as "incomplete and defective work" the defendant stated that when he entered into possession of the house in February 2001 the air-conditioning system was not working and he had to engage an air conditioner operator to commission the air conditioner and to fix faulty wiring. He also stated that the dishwasher and fridge had not been installed and the floor surfaces on the slab were uneven and not suitable for carpet laying. The hot water system installed was not in accordance with the specifications. The defendant also explained that at some later stage he became aware that there was a problem with flashing in the upstairs south east corner windows of the house when the rains came and that there was evidence of moisture ingress at that point.
Following the provision of the report by Mr Knowles there was a considerable amount of correspondence and communication between the plaintiff and the defendant on the issue of whether the home was practically complete so that handover could take place by the plaintiff being paid what it was due and handing over the keys to the defendant so he could move into the house. The defendant stated that he considered that the house was not at a practical completion stage and he was not prepared to pay all of the moneys claimed by the plaintiff until a final estimate of the costed variations had been determined and the plaintiff had completed outstanding items and rectified alleged defects. A proposal was made by the plaintiff that the defendant pay the amount due to the plaintiff less what was still in dispute in relation to the estimate of variations (Exhibit 3 p 81). At the end of December the defendant paid the sum of $60,000 to the plaintiff. He stated that this sum was suggested by Mr Ian Borrell as an appropriate amount to pay although he was unable to explain under cross‑examination how that sum was arrived at. In the period from December to February the dispute escalated and correspondence contained a number of allegations of breach or repudiation of the contract. In February 2001 the situation had not resolved and the defendant was unable to gain access to the house despite requests made to the plaintiff by the defendant and by Mr Borrell on his behalf. On 14 February he engaged a locksmith and gained access to the house and took possession without the consent of the plaintiff.
The defendant has been residing in the premises since February 2001. The items of (defects and omissions) in Mr Knowles' original report of 8 December with the additions added on 14 February 2000 have been expanded and listed into the Scott Schedule. The plaintiff described in some detail his concerns in relation to those matters in the course of his evidence. He explained that there were only a few items that he has had rectified since he moved in as he felt that most of the matters should await the outcome of the dispute although he had the financial resources to complete all the outstanding work if he had chosen to do so. He agreed that there were some items in the Scott Schedule that had not been raised with the plaintiff in the early stages of the proceedings and agreed that the issue of the deep scratching on the marble floors in the bathrooms requiring replacement and the moisture ingress in the south east corner and lack of flashing to those windows was not raised with the plaintiff's representatives or the plaintiff at an inspection of the premises on 28 November 2001. He explained that the costings listed on the Scott Schedule were estimates prepared on Mr Borrell's advice or as a result of costings he had obtained from third parties. He conceded that in some cases the estimate has turned out not to be accurate. He also conceded that the claim for $5,000 in the Scott Schedule was an error and was not being pursued by him as that amount of money had been allocated to the price of electrical appliances and items.
Although the defendant appeared to have had a close interest in the detail and progress of the construction of his residence it was also apparent that his position in relation to many of the matters in dispute between himself and the defendant was informed by advice he received from Mr Ian Borrell and Mr Barry Knowles.
Mr Ian Borrell is a quantity surveyor of many years experience and is also a graded arbitrator with the Australian Institute of Arbitrators. He described the role of a quantity surveyor as being the "money man in construction". He was first contacted by the defendant in December 2000 and was subsequently involved in advising the defendant in relation to variations in the specifications, the costs of those variations and in general negotiations with the plaintiff. As the issue in relation to the quantum of the variations apart from the GST component was to some extent resolved between the parties during the course of the proceedings, Mr Borrell's evidence was limited to a general outline of his involvement in the dispute between the plaintiff and the defendant and specific evidence in relation to the GST calculation. However, it is clear from the correspondence in Exhibit 3 that Mr Borrell was also involved in advising the defendant generally and became involved in negotiations and communications between the defendant and the plaintiff. In a fax dated 8 March 2001 to the plaintiff he expressed concerns at what he characterised as an uncooperative attitude by the plaintiff and urged a resolution of the dispute.

Mr Borrell stated that at the time of the introduction of the Goods and Services Tax in June 2000 the calculation of GST and the methods that could be adopted on a building contract were contained in a draft GST Ruling from the Tax Office. He described the three methods that could be used to calculate the GST the first was to accept progress claims as evidence of the value of work done at that time. The second option was to work out the value on a pro rata basis calculated as from the nearest progress payment to 30 June. Mr Borrell said that that was the method adopted by him as it seemed to be logical in the circumstances. The third method that could be used was to have a valuation of the works as at 1 July 2000 completed by a suitably qualified person. Mr Borrell stated that although it was open to the plaintiff to choose the third method and employ a valuation as at 1 July that method of calculation resulted in a greater proportion of the contract sum being subject to GST. Mr Borrell stated that the wholesale sales tax on various items was abolished once the GST was introduced and the tax ruling provided that identifiable wholesale tax would be credited but that it was a difficult exercise to ascertain what items would have attracted wholesale tax because the percentage varies and only applies to certain categories of goods.
Mr Barry Knowles is a registered builder who has had considerable experience as a supervisor and manager of construction works. He described the circumstances in which his inspection was carried out culminating in his report of 8 December 2000. He stated that in his opinion the construction had not reached a stage of practical completion at the time of his inspection or at a later date because there were many items that were either incomplete or required rectification. The extent of work required to be done would make the house unfit for occupation. Mr Knowles gave detailed evidence in relation to each item in his list of incomplete and defective works.
Mr Knowles described his inspection of an area of alleged water ingress in the south east windows of the house on the first storey. He stated that on investigation he concluded that the evidence of moisture was as a result of the MDF (reconstituted wood) nosing of the window coming into contact with the exterior course of brickwork which causes the MDF to receive moisture and to swell up and to show signs of damage. He said that in the course of investigating this it became apparent that there were no flashings installed in the windows abutting the MDF nosing. He stated that in his opinion this did not conform with the Australian Building Code requirements and was an additional factor that prevented the construction having reached a stage of practical completion. He did not agree that if the plaintiff had installed a waterproof membrane of fibreglass over the adjacent balcony and underneath the window and over the cavity between the exterior and interior brick walls that would constitute "flashing" and would comply with the Australian Building Code. He did not concede that this would be the case even if the waterproof membrane was just as effective as flashing in preventing the ingress of water or moisture.
Mr Knowles described deep scratches in the marble tiles in the en suite and ground floor bathroom but stated that they were not evident by just walking into the room. He gave evidence that if they could not be repaired by means of grinding down and re‑polishing they would have to be replaced and estimated the cost as at approximately $10,000. He estimated the cost of repair by grinding and polishing in the vicinity of $1,500. He conceded that he was present at the inspection conducted by the parties and their representatives on 28 November 2001 and that the issue in relation to the marble tiles did not arise. He also conceded that the deep scratching in the marble tiles was not referred to in his report of 14 February 2001.
Despite rigorous cross‑examination Mr Knowles would not concede that many of the items in his report and listed in the Scott Schedule were matters of a minor or of a maintenance nature. He insisted that the nature of the work required for rectification or completion would interfere with reasonable occupation and in any event if the defect constituted non‑compliance with the building code it could not be said that the building had reached a stage of practical completion.
At the conclusion of the defendant's case the plaintiff recalled Mr Tony Secola and called a further expert witness, Mr Robert Wallis, to deal with the claims in relation to scratching on the marble floors and the ingress of water or damp in the south west windows as those matters had only been included in the claim for defective works at a late stage and occasioned an adjournment of the proceedings from 6 June to 28 June.
During that adjournment Mr Tony Secola had the opportunity of inspecting the south east windows and the allegations of water or moisture ingress on 18 June. Unfortunately, he was not given the opportunity to inspect the marble tiles in the bathrooms as the defendant was under the impression that the inspection was to be confined to the south east windows and refused access to Mr Secola. Mr Secola agreed that there was some evidence of moisture in the MDF nosing placed directly underneath the aluminium windows on the second storey south east corner adjacent to a balcony. He attributed that to the fact that the nosing touched the exterior course of bricks. This is demonstrated by a side elevation sketch entitled "Existing Window Detail" (Exhibit 63). Mr Secola agreed that that installation was faulty. The solution proposed by Mr Secola and demonstrated in a further sketch in Exhibit 63 was to cut back the nosing so that it did not have contact with the exterior brick course. Mr Secola was of the opinion that this could be done without removing the window and at relatively minor cost. He denied that there was a failure to provide flashing at the south east upper storey windows and gave evidence of the installation of a waterproof fibreglass membrane installed in two stages to protect the balcony and the window area. His evidence was confirmed by a fax sent to the defendant on 20 September 2000. Mr Secola stated that he saw the fibreglass membrane being installed. He was of the opinion that by installing the fibreglass membrane the building code had been complied with.
The plaintiff called Mr Robert Wallis, a registered builder, with almost 40 years experience as a builder, a project manager and arbitrator. Mr Wallis agreed with Mr Knowles and with Mr Secola that the evidence of moisture and damage to the MDF nosing was as a result of it being allowed to come into contact with the exterior brick course. He explained that the MDF material rapidly draws in moisture if in contact with a damp surface. He agreed with Mr Secola that the nosing could be cut back or replaced if necessary without removing the window and that cost he estimated in broad terms to not exceed $500. He described the use of a fibreglass membrane as being the equivalent of installing flashing and a successful means of preventing water ingress in aluminium windows on two upper storey houses. At T305 he described the method of using a waterproof membrane as "tanking" as it is considered to be as waterproof as a tank and confirmed that it acts as a flashing and satisfies the requirements of the building codes of Australia because it stops the entry of water and water dampness rising.
I find that as at 15 December 2000 the plaintiff had completed the building of the house to a stage of "practical completion" consistent with the definition in the contract. It was structurally complete and reasonably fit for human habitation. While there were some uncompleted and defective items I am satisfied that they were of a minor nature which would not unduly interfere with the use of the premises or are properly characterised as maintenance items. I find that to be the case even if most of the items of defective work contained in the reports prepared by Mr Knowles dated 8 December and 14 February and listed in the Scott Schedule were found to be the sole responsibility of the plaintiff. Most of the items are of a minor aesthetic nature requiring non‑intrusive rectification (see items 5, 6, 7, 8, 9, 11, 12, 13, 15, 18, 22, 24, 28, 29, 32, 35, 37, 44, 45 and 47). The more substantial items such as the repainting of external render on a wall (item 1), replacement of Colorbond capping (item 2) and items 31, 32, 33, 34, 35, 36, and 37 would involve rectification to the exterior of the house and in circumstances where it is not likely to interfere in any unreasonable way with habitation of the house.
The items of the works alleged to involve the most extensive and costly repairs, namely the scratching to the marble tiles in the bathrooms and the alleged lack of flashing under the windows in the south east upper storey were not cited as defects in the manner that they are now presented by the defendant when the original list was drawn up by Mr Knowles on 8 December 2000 nor in a further report in February 2001. Although there was reference to scratches on the surface of the marble floor tiles there was no suggestion that the scratches were so extensive as to require replacement and the original item was estimated to cost $440.
It is also significant that the scratching of the tiles was not referred to in the inspection carried out in the presence of the parties on 28 November 2001. This suggests that the polishing carried out by WA Terrazzo Floors and referred to in the defendant's evidence rectified the scratching to a satisfactory level. I am satisfied that the surface scratches on the marble floor tiles referred to in the original report from Mr Knowles and requiring the repolishing at a cost of $400 plus GST was a maintenance item of a minor nature that did not impact on the house having reached a practical completion stage by 15 December 2000. If some other defect has become apparent since then I consider that even if it was found to be a responsibility of the plaintiff it is in the same category as the allegations in relation to the south east upper storey windows, namely a defect that has come to light some time after the defendant has taken up residence in the house and even if found to be a defect to the extent claimed by the defendant and the responsibility of the plaintiff it would not affect my findings that the house had reached a stage of practical completion as at 15 December 2000. The assessment or conclusion that a construction of a residence has reached a stage of practical completion within the definition in the building contract that then requires payment of the final progress claim and hand‑over of possession of the premises has to be made on the apparent state of the building at that time. To suggest as the defendant does that latent defects that come to light some time later can have a retrospective effect on that assessment is inconsistent with the terms of the contract and would produce unworkable results. The contract provisions for a defects liability period in clause 12 anticipates circumstances where defects would become apparent after practical completion and handover but would still be the responsibility of the builder.
Although Mr Knowles has considerable experience in the building industry his approach to the question of whether the building had reached practical completion stage is hard to understand other than it reflects an obdurate stance. Despite the fact that many of the items in the Scott Schedule were patently of a minor nature Mr Knowles refused to make any concessions that if taken in isolation they could not render the building incomplete.
In the circumstances of this case it is hard to avoid coming to the conclusion that the defendant had decided in December 2000 that he was not happy with the plaintiff's methods of construction and/or manner in which the contract was administered and proceeded to conduct investigations into every detail of the construction no matter how minor with a view to exposing some fault on the part of the plaintiff. He was astute to discover defects and seemed undeterred by insufficient evidence. In these circumstances it is not surprising that any efforts to resolve the dispute were unsuccessful. In cross‑examination the defendant all but conceded that by the end of December there was only approximately $6,000 of variations remaining in dispute between the parties and he had the option of paying the undisputed amount less that $6,000, moving into the residence with the consent of the builder and leaving the issues of uncompleted and defective works to be either rectified by the builder as maintenance items after he had taken possession. The defendant agreed that on 12 December the plaintiff had agreed to rectify a number of the matters in that schedule. The fact that some of the matters included in the Scott Schedule were found on closer examination to be either non‑existent or reflected an over estimate of cost or were simply included by way of error (the $5,000 allowance for contingency sum) confirms my findings in relation to the attitude and approach adopted by the defendant in his dealings with the plaintiff. As the plaintiff had brought the building to a stage of practical completion it was entitled to rely on the provisions of clause 17 of the contract and to the amount claimed on 143 December 2000 within 10 days.
The failure of the defendant to accept that the building was at practical completion, attend the handover meeting proposed by the plaintiff and pay the amount due breached the contract.
I do not accept the defendant's submissions that the plaintiff repudiated the contract by failing to attend a handover meeting proposed by the defendant on 19 January 2001. At that stage the defendant was in breach of the contract by continuing to refuse to acknowledge that practical completion had been reached and the balance of the contract sum was due and payable.

Balance of contract sum due to plaintiff as at 15 December 2000

Consistent with my finding that the building was at a stage of practical completion as at 15 December 2000 the plaintiff is entitled to the balance due under the contract calculated as the final progress payment together with the adjusted amount for variations.
On 14 December the plaintiff sent an amended tax invoice to the defendant. This invoice included the final progress claim for the building having reached practical completion of $56,732 together with the sum of $5,673.20 GST payment in relation to the final tax claim. In addition variations of $48,887.72 inclusive of GST pursuant to the invoice dated 1 December 2000 together with an additional sum of $1,961.73 inclusive of GST being for final variations in an invoice dated 13 December 2000 was claimed.
The partial payment of $60,000 paid to the plaintiff by the defendant in January 2001 should be deducted from the original amount claimed together with the sum of $4,346.45 being agreed reductions from the final variation costings should be deducted leaving the total amount due as from 2 January 2001 as $48,908.20 rounded off to $48,908.00.
Although the defendant disputes the amount of GST claimed I am satisfied that the plaintiff has adopted an approved method of calculating the GST. Although the issue of crediting wholesales tax was raised there were no wholesale tax credits that have been identified so that any deduction could be made. As was pointed out by Mr Borrell the amount of wholesales tax varies from item to item and only applies to some goods and materials.
I find that the plaintiff is entitled to interest on any amount due to it from the defendant pursuant to the terms of the contract as from 2 January 2001 to the date of judgment on 12 July at the rate of 10 per cent. I do not find that the plaintiff's letter of 21 December suggesting a payment of the undisputed amount operates as a waiver of its rights to interest in the circumstances in this case. The amount of $60,000 paid by the plaintiff to the defendant was not the total amount of the plaintiff's claim not in dispute at that date. The offer was clearly rejected by the defendant so that the plaintiff is entitled to interest in terms of the contract, namely interest at 10 per cent from 2 January 2001 to 12 July 2002, $7,476.90 rounded off to $7,475.

The defendant's entitlement to damages for rental payments from 6 October to 15 December 2000

In accordance with my finding that the building had reached practical completion stage at 15 December the defendant is not entitled to claim for rental after that date. I am also satisfied that the building could not be completed on 6 October due partly to the delay in obtaining a bricklayer for a period of approximately 6 weeks in January 2000 and this was a matter properly characterised as something over which the plaintiff had no control, namely the unavailability of labour. I am satisfied on the basis of the evidence of Mr Secola and confirmed by Mr Foster from the Masters Builders Association that there was difficulties with shortages of labour due to a building boom caused by the introduction of the GST in July 2000. The defendant was notified of the delay and was also given sufficient notice that the plaintiff was having difficulty because of the defendant's delay in making selections of finishing materials at crucial times in the construction timetable. I am satisfied that that caused a further delay of approximately 6 weeks duration. Although that is only an estimation, as the building was brought to practical completion only 10 weeks after the due completion date of 6 October rather than 12 weeks I am satisfied that the plaintiff was entitled to an extension of time to at least 15 December 2000. Consequently, the defendant's counterclaim for rental paid after 6 October 2000 is dismissed.

Defective or incomplete works

In closing submissions the defendant argued that the plaintiff has admitted that there are defects in the building and that is confirmed in correspondence in December 2000 and January 2001. It is therefore claimed that the work has not been done in a proper and workmanlike manner and the owner is entitled to damages. It is also submitted that as the plaintiff has purported to terminate the contract it has no right to return to the property to remedy any defective work.
While I accept that it is not appropriate in the circumstances of this case for the plaintiff to return to the site to carry out any rectification work that is not because it has purported to terminate the contract but rather that it is clear that the relationship between the parties is such that that is not practicable. I also do not accept that the items listed in the schedule of defective and incomplete works is indicative of a finding that the work was not completed in a proper and workmanlike manner. This is confirmed by Mr Knowles' opinion that "the general standard of finish achieved by the builder…is very good" – see Mr Knowles' report dated 8 December 2000. As referred to above many of the items referred to are of a minor or maintenance nature. The fact that a period of maintenance liability is provided for in the building contract recognises that in any construction there will be minor incomplete matters or items requiring some rectification by the builder even though the building as a whole is practically complete in the sense that it is structurally complete and suitable for habitation. The plaintiff was aware that there were a number of minor matters requiring its attention and recognised that in the initial responses to Mr Knowles' report in December 2000. At that stage it indicated clearly what matters it was prepared to rectify and what items it considered were either the responsibility of the defendant or matters that did not require any rectification. I propose to make findings in relation to each item in the Scott Schedule by reference to the schedule and deduct the total cost of the estimated cost from the claim to be awarded to the plaintiff. I find that the plaintiff is responsible for the cost of rectification of the items listed below. With a few minor exceptions (indicated in brackets after each numbered item) the cost allocated to each item is that estimated by the plaintiff. I am satisfied that the defendant's estimates were in some cases exaggerated with labour costs in excess of what I find to be a reasonable charge based on the evidence of Mr Secola and Mr Wallis. As far as the additional items are concerned there will be no order for repair or repolish of the marble floors although I will allow the amount of $440 for the repolishing carried out by WA Terrazzo in 2001. In addition there will be an allowance in relation to the second and third additional items being $340 for repairing the crack to a plaster at the junction of the second storey floor slab and brickwork at stair landing and the sum of $500 for the modification or replacement of the MDF sill in the south east upper storey window. The balance of items in the schedule have either been completed by the plaintiff already, or are the defendant's responsibility or do not require any rectification as is indicated in the plaintiff's comments indorsed on the schedule (attached hereto) and confirmed by the evidence.

The plaintiff is required to pay its estimates of cost to remedy the following items in the Scott Schedule:
Items 1, 2, 3, 4, 6, 7, 8, 9, 10, 12, 13, 15, 18, 22, 24, 29 ($30), 32, 33, 34, 35, 37, 40 ($500), 42, 43, 44, 45.
The costs of these items amount to $5,759, say $5,760. I consider it appropriate to allow for a 20 per cent margin as the defendant will have to engage tradesmen for this work ($1,152). An allowance for GST will also be included ($576). The final amount of $7,488 will be set off against the amount assessed as due to the plaintiff for its claim for final progress payment together with GST and variations plus interest.
Summary:
Balance of contract sum due to plaintiff  $48,908.00
Interest at 10% from 2 January 2001 to
12 July 2002 rounded off to  $ 7,475.00
$56,383.00
Less sum for defective or incomplete
Works to be set off against plaintiff's
Claim  $ 7,488.00
$48,895.00